SPE 115099

Technical, Economic and Risk Analysis for a Multilateral Well

D. Arcos, D. Zhu and E. Bickel, SPE, Texas A&M University

Copyright 2008, Society of Petroleum Engineers

This paper was prepared for presentation at the 2008 SPE Russian Oil & Gas Technical Conference and Exhibition held in Moscow, Russia, 28–30 October 2008.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been
reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect any position of the Society of Petroleum Engineers, its
officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to
reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract
Multilateral well technology is considered a development strategy as the oil and gas industry is increasingly approaching more
hostile environments. It remains attractive to maintain efficient exploration of oil and gas fields in order to maximize
profitability with minimum uncertainty. Some of the non-conventional oil and gas reservoirs currently being drilled are
characterized by significant heterogeneity, tight and naturally fractured, faulted/compartmentalized, heavy oil and, depleted
reservoirs/mature development. However, sometimes the high risk involved accompanied by economic disadvantages have
diminished the ability of multilateral wells to maximize access to reserves without incurring higher development costs.
The objective of this study is to develop a methodology to assist engineers in their decision making process of maximizing
access to reserves. The process encompasses technical, economic and risk analysis of various alternatives in the completion of
a well (vertical, horizontal or multilateral) by using a well performance model for technical evaluation, and a deterministic
analysis for economic and risk assessment.
In the technical part of the decision making process, the flow rate for a defined reservoir is estimated by using a pseudo-
steady state flow regime assumption. The economic analysis departs from the utilization of that flow rate data assuming certain
pressure decline. Financial Cash Flows (FCF) are generated to measure the economic worth of investment proposals. Net
Present Value (NPV), Internal Rate of Return, Profitability Index and payback period are the main economic yardsticks used
in the analysis.
Last, a deterministic decision tree is used to represent the risks inherent in geological uncertainty, reservoir engineering,
drilling, and completion for a particular well. The NPV generated from the economic analysis is used as the base economic
indicator. In addition, the risk associated at each stage of the project is considered with an assigned probability. By selecting a
type of well that maximizes the expected monetary value (EMV) in a decision tree, we can make the best decision based on a
thorough understanding of the prospect.
The method introduced in the paper emphasizes the importance of a multi-discipline concept in drilling, completion and
production technology. The examples presented in the paper will assist geologists, geoscientists, engineers, and managers in
collaborating together in a development project.

Introduction
To efficiently develop oil and gas fields, each reservoir must be evaluated with a well planning, drilling and completion system
that maximizes hydrocarbon recovery. Several alternatives can be selected based on the feasibility of the system, revenue
versus cost, and risk or uncertainty involved. In order to properly analyze and evaluate a project, it is imperative to first study
the reservoir performance followed by an economic and risk analysis; keeping an emphasis on the relationship among them.
In this paper, we use a single well system to evaluate a project based on a process that integrates three steps (performance
estimation, economic analysis and risk assessment). First, a well performance model combined with pressure decline rate is
used to calculate cumulative production for a selected system. Next, the revenue from the production and the cost for the
defined system is used to conduct an economic calculation to generate NPV for the project. Finally, the uncertainties involved
in the conditions and properties of the reservoir, drilling, completing and operating the well are considered in a risk assessment
to aid in making decisions about the development plan. The geological aspects include structural complexity of faulting and
folding, compartmentalization, natural fracture network, lateral extent of the reservoir, and lithology of target formation. The
reservoir engineering considerations refer to horizontal and vertical permeability (kh and kv), porosity, reservoir pressure,
decline rate, and fluid properties. The drilling feature consists of junction stability, debris management, re-entry feasibility,
laterals isolation, tubular capacity, and wellbore stability. Furthermore, mechanical integrity, control of sand production,
stimulation, and ability to implement the lifting mechanism are included in the completion aspect (Brister, 2000).
2 SPE 115099

Methodology Description
The methodology presented in this study aims to assist engineers in decision making process by using hypothetical examples
under certain reservoir characteristics to evaluate whether a multilateral well application is the most efficient alternative to be
chosen for the project. This decision making process comprehends three different sections: technical evaluation, economic
analysis and risk assessment.

Technical Analysis
To illustrate how to estimate well production performance, we used the pseudo steady state flow regime, which assumes a non-
flow boundary condition and a pressure that is not constant but instead declines at a constant rate with time. This pressure
decline in the reservoir is based on material balance of the drainage system. The study uses previously published performance
models for well performance calculations. The equations are summarized in Table 1.

Table 1: Oil and gas flow rate equations for different well structures

Vertical well Horizontal and multilateral well

( ) qo =
(
b k h k v P − Pwf )
kh P − Pwf
Undersaturated oil qo = ⎡ A ⎤
⎛ 0.472re ⎞ 141.2 Bo μ ⎢ln + ln C H − 0.75 + S R + S ⎥
well 141.2 Bo μ ⎜⎜ ln + s ⎟⎟ r
⎝ rw ⎠ ⎣ w ⎦

qg =
( 2
kh P − Pwf
2
) qg =
( 2
b kh kv P − Pwf
2
)
⎛ r ⎞ ⎡ A ⎤
Gas well 1424 μ Z T ⎜⎜ ln 0.472 e + s ⎟⎟ 1424μ Z T ⎢ln + ln CH − 0.75 + S R + S + Dqg ⎥
⎝ rw ⎠ ⎣ rw ⎦

The vertical well equations for inflow performance have been summarized by Economides et al.(Economides, et al., 1994).
For oil wells, flow rate is calculated as a function of reservoir drawdown, which is the difference between the reservoir
pressure and flowing bottom-hole pressure as the pressure depletes due to production. By using this approach, all of the other
parameters are kept constant in the calculation. For vertical gas wells, fluid properties such as density (ρ), viscosity (μ), and
gas compressibility (Z) change as the reservoir pressure changes; thus the fluid properties are re-evaluated when the reservoir
conditions are updated. For horizontal and multilateral oil wells, Babu and Odeh’s model (Babu and Odeh, 1989) is used to
estimate horizontal laterals’ performance. For gas wells, Kamkom and Zhu’s model, which is based on a simple equation
derived from the oil well model (Kamkom and Zhu, 2006), is utilized.
The oil and gas flow rates at surface are calculated by coupling the well performance models with a wellbore flow model.
For a single phase flow, mechanical energy balance equation is used to calculate hydrostatic pressure drop and frictional
pressure drop in the well. If flow becomes a two-phase system, empirical correlations are considered.
After monthly flow rates for at least the first six months are calculated, a decline curve analysis by “least squares fit” method
(Mian, 2002) is utilized to find a curve that approximates the hypothetical production history. Even though there are three rate
versus time decline curves according to Arps (Arps, 1944); exponential, hyperbolic and harmonic declines, only a hyperbolic
decline curve is used. This type of decline curve considers the decline characteristic (Di) not as a constant value but a variable
that changes with producing time, and a curvature of this curve defined by a hyperbolic exponent (bhyp). To calculate
production forecast, the rate at time t is estimated by Eq. 1. To obtain the total produced volume, Np, between the rate at an
initial time, Qi, and the rate at time t, Qt , we use Eq. 2. Qi, bhyp, and Di are constantly changed using least squares fit analysis
to find the solution which matches the calculated production rate to the hypothetical production history according to the type
of completion and decline pressure to be presented in the reservoir.

Q = Qi (1 + bhyp Dit )⎜⎝

⎛ −1 ⎞
bhyp ⎟⎠ (1)

(1 − b )D [Q ]
bhyp
Q 1−bhyp 1−bhyp (2)
Np = i
i −Q
hyp i

For the purpose of risk assessment, the production rate is calculated assuming different reservoir permeability conditions;
“high” (best permeability case), “medium” (base permeability case), and “low” (worst permeability case).

Economic Analysis
Once the production forecast is generated, a deterministic model is introduced into the economic analysis. Oil and gas prices,
capital expenditure (CAPEX), and operating expenditure (OPEX) are the main factors which have an impact on the Financial
Cash Flow (FCF). Even though this methodology recommends measuring economic performance by using not only Net
Present Value (NPV) but also Internal Rate of Return, Profitability Index, and payback period for each completion type; the
analysis in this paper exclusively focuses on NPV as the main economic performance indicator, which is depicted in Eq. 3.
SPE 115099 3

n ⎡ 1 ⎤
NPV = ∑ (Fv )t ⎢ ⎥ (3)
⎣⎢ (1 + ie ) ⎦⎥
t
t =1

For the economic analysis in this study proposals are considered to be mutually exclusive under a concessionary petroleum
fiscal system. The concessionary system allows private ownership of mineral resources while paying royalties and taxes to the
host government to assign the right to explore and develop certain areas. The major components of the economic analysis are
ownership, commodity prices, CAPEX, and OPEX. Some of the considerations included in each component are presented
below:
• Ownership: Working interest before payout and after payout, royalties, override, and net revenue interest before payoff
and after payoff. Net revenue interest is associated with working interest and is highly dependant on the non-operating
interest (e.g. royalties).
• Commodity Prices: Oil and gas initial prices with basis differential if needed, gathering and transportation fees, and
energy content adjustment.
• CAPEX: Pre-drilling costs, drilling and completion costs, gathering and surface equipment costs, facility costs, and
abandonment costs.
• OPEX: Fixed or lease costs, variable costs, water disposal costs, and production taxes.
Figure 1 simplifies how FCF are generated in order to estimate NPV for all possible well types prior to assess risk in the
final part of the decision process tool. FCF is estimated after working interest, non-operating interest, and provincial and
federal income taxes are deduced from gross revenue.

Deductions
Gross Revenue Royalty Net Revenue
Project OPEX, debt depreciation, depletion
($/STB*STB) (% of gross) (after royalty)
and amortization, etc.

Net Cash Federal Income Taxable Income Provincial Taxes

Flow Tax (after provincial taxes) Ad valorem, severance, etc.

Fig. 1 Concessionary system flow diagram (after Mian, 2002)

Risk Analysis
After the economic analysis is finished, we further conduct a risk analysis to complete the evaluation of the project. New
technologies such as multilateral well systems will likely bring a higher return on investment. Their inherited risk is generally
higher too. We use a decision tree to analyze the risk involved in a project, which is a deterministic tool that aids in the
decision making process by graphically representing a set of alternative courses of action that provides a group of different
outcome states (Mian, 2002).
The following conventions are adopted in structuring the decision tree:
• Decision node ( ): It illustrates nodes where decisions have to be made. The most optimal alternative between courses of
action is to be selected. The option with the highest EMV is chosen.
• Chance node ( ): It represents points where there are different possible outcomes at the node. The decision maker has no
control over these actions and only chance or nature determines an outcome.
• Probability (%) or chance: It addresses the likelihood of possible outcomes. Previous experience and knowledge are used
to objectively evaluate the chance of each outcome to occur.
• End, terminal or payoff node ( ): It is the deterministic financial outcome of a decision and is based on any type of
economic indicator although usually NPV at certain discount rate is utilized. This type of node connects the economic
estimator, based on technical evaluation, to the risk analysis. Using probability, pi, for the event i at a chance node, the
expected monetary value (EMV) at the node is

n
EMV {C1 } = ∑ pi ( NPVi ) (4)
i =1

The most critical decision to be made is in the “leftmost” decision node of a tree. At this point, the selection comes only
after considering the EMV of the various outcomes, and the probabilities of success or failure of the prospective well.
The uncertainties that are considered in the following examples include geological information, reservoir properties, and
drilling and completion risks.
4 SPE 115099

Hypothetical Examples
In order to illustrate the applicability of this methodology, three examples were developed with various reservoir
characteristics. All three examples used the similar geological description, which is a two-layer formation with a fault system.
The first two examples are for oil wells. Example 1 has a moderate anisotropy ratio (kv/kh=0.1), and Example 2 has an extreme
anisotropy ratio (kv/kh=0.01). Example 3 is for a low-permeability gas formation. The formation description is listed in Table
2. For each example, we compared the development plan of using a vertical well, a horizontal well or a multilateral well
system. The illustration of well planning is shown in Fig. 2 (Fig. 2a vertical well, 2b. horizontal well and 2c. multilateral
well).

Table 2 Input data for examples 1, 2 and 3 under base case scenario1

Example 1 Example 2 Example 3

Parameter
Pay Zone 1 Pay Zone 2 Pay Zone 1 Pay Zone 2 Pay Zone 1 Pay Zone 2
kh: 40 md 20 md 40 md 20 md 0.2 md 0.1 md
kv: 4 md 2 md 0.4 md 0.2 md 0.02 md 0.01 md
h: 100 ft 60 ft 100 ft 60 ft 90 ft 80 ft
B: 1.1 res bbl/STB 1.1 res bbl/STB 1.1 res bbl/STB 1.1 res bbl/STB N/A N/A
µ: 2 cp 2 cp 2 cp 2 cp 0.0244 cp 0.0244 cp
re : 1489 ft 1489 ft 1489 ft 1489 ft 1489 ft 1489 ft
rw: 0.328 ft 0.328 ft 0.328 ft 0.328 ft 0.328 ft 0.328 ft
s: 8 5 8 5 2 0.7
s*: 16 10 16 10 4 1.4
P: 3500 psi 3200 psi 3500 psi 3200 psi 3161 psi 3040 psi
Pwf: 2000 psi 2000 psi 2000 psi 2000 psi 2500 psi 2500 psi
Pwf*: 2000 psi 1635 psi 2000 psi 1635 psi 2500 psi 2488 psi
Z: N/A N/A N/A N/A 0.945 0.945
Temp: 210 degF 190 degF 210 degF 190 degF 210 degF 205 degF
a*: 1000 ft 1000 ft 1000 ft 1000 ft 1000 ft 1000 ft
b*: 3500 ft 3500 ft 3500 ft 3500 ft 3500 ft 3500 ft
LHorizontal: 3000 ft N/A 3000 ft N/A 3000 ft N/A
LMultilateral: 2500 ft 2500 ft 2500 ft 2500 ft 2500 ft 2500 ft
TVD: 7100 ft 6000 ft 7100 ft 6000 ft 7300 ft 7020 ft

a: Schematic of vertical well b: Schematic of horizontal well c: Schematic of multilateral well

structure. system. system.
H2 Pay Zone 2 H2 Pay Zone 2 b
K2 K2
L a

Pay Zone 1 Pay Zone b Pay Zone 1

H1 H1 H1 b

K1 K1 K1
L a L a

Fig. 2 Well planning for the examples

Technical Analysis: The input data for the examples is presented in Table 2, which shows all reservoir information referred
to as “base case scenario” on vertical, horizontal and multilateral well configurations necessary to predict production
performance. The base case permeability for oil wells (Examples 1 and 2) is 40 md, and 0.2 md for the gas well (Example 3).
In addition to the base case scenario, Examples 1, 2 and 3 are also studied considering a “worst case scenario” which uses 50%
of kh and kv values of the “base case scenario”, and a “best case scenario” which uses 150% of the permeability value as an
optimistic evaluation of the reservoir for risk analysis purpose. Examples 1 and 3 are characterized by kv/kh=0.10 while
Example 2 used kv/kh=0.01 for extreme anisotropic case. The sole purpose of these examples is to take the reader through the
decision process methodology. Therefore, water production is accounted for after the first year of production and increasing
5% annually assuming a vertical well life of 25 years and 15 years for horizontal and multilateral wells. For these examples,
vertical wells are perforated in all pay zones (2 zones), and the horizontal and multilateral wells are drilled into either one or
two pay zones with higher reservoir contacts (Table 2).

*
Only applicable for horizontal and multilateral well systems.
SPE 115099 5

The initial production rate calculated for the examples are summarized in Table 3. Since the only difference between
Examples 1 and 2 is the anisotropy ratio, the vertical well performances for both cases are identical. Based on pressure decline
analysis, the production rate decline curves are plotted in Figs. 3 – 5, with Example 1 shown in Fig. 3, Example 2 in Fig. 4 and
Example 3 in Fig. 5. Comparing Figs. 3 and 4, obviously the horizontal and multilateral wells in Example 1 (Fig. 3) exceed the
vertical well performance because there is more significant lateral extent in the reservoir when the anisotropy ratio is not too
low (kv/kh=0.1), but the benefit of horizontal and multilateral well diminishes when the anisotropy ratio decreases (Fig. 4,
kv/kh=0.01). In Example 1, the multilateral well production exceeds the vertical well production by 7 fold, meanwhile in
Example 2 the fold increase is only 3 times.
It is also noticed that Example 3 (Fig. 5) is a gas well with very low permeability of each pay zone, especially the upper
zone. At the assumed anisotropy ratio, the vertical permeability of the top zone becomes so small that production from the
laterals is significantly reduced. In such case, the production rate obtained from a multilateral well may not surpass a
horizontal well production enough to justify (nearly 50% additional production). This will be discussed in the following
section.

Table 3 Initial Production for oil and gas wells under different scenarios

Initial oil production for Examples 1 and 2

Initial Monthly Production

Well Type Example 1 - Oil Well with kv/kh=0.10 (STB/M) Example 2 - Oil Well with kv/kh=0.01 (STB/M )
Low (Worst) Medium (Base) High (Best) Low (Worst) Medium (Base) High (Best)
Vertical Well 25,069 50,146 75,213 25,069 50,146 75,213
Horizontal Well 132,547 265,097 397,644 45,188 90,333 135,481
Multilateral Well 182,979 366,137 549,718 69,375 138,642 208,008

Initial gas production for Example 3

Initial Monthly Production

Well Type Example 3 - Gas Well with kv/kh=0.10 (Mcf/M)
Low (Worst) Medium (Base) High (Best)
Vertical Well 6,723 13,445 20,168
Horizontal Well 52,659 105,318 157,977
Multilateral Well 56,689 113,598 170,084

1000000

100000
Volume, STB

10000

1000
0 25 50 75 100 125 150 175
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 3 Example 1 monthly oil production with kv/kh=0.10 under base case scenario
6 SPE 115099

1000000

100000

Volume, STB

10000

1000

100
0 25 50 75 100 125 150 175
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 4 Example 3 monthly oil production with kv/kh=0.01 under base case scenario

1000000

100000
Volume, Mcf

10000

1000
0 25 50 75 100 125 150 175
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 5 Example 3 monthly gas production with kv/kh=0.10 under base case scenario
SPE 115099 7

Economic Analysis: For this mentioned fiscal system, working interest before and after payout is 80%, royalty 12%, and ad
valorem 5%. Table 4 shows the economic input data used to estimate NPV at 10% discount rate. There are three examples,
each has three well types (vertical, horizontal and multilateral), and the economic parameters used in Examples 1 and 2 (oil
wells) are the same. We first calculated the FCF for the base case (moderate permeability), and Figs. 6 through 8 reveal
cumulative FCF for each type of well system of every example using only a “base case scenario” assumption. Example 3 is the
case of a well with a longer payout period. The effect of heterogeneity is considered (fault system/compartmentalization) in
either performance evaluation or economic analysis, and it is only reflected in the risk analysis after carefully reviewing the
probability to succeed in drilling. The extended results of permeability variation (best, moderate and worst) are presented in
Table 5. In the medium quality reservoir NPV results, we observe that NPV obtained from multilateral wells in Examples 1
and 2 (oil well) is 1.5 times higher than NPV resulted from horizontal wells, while in Example 3 (gas well) the fold increase is
less than 5%. Even through the same conclusion holds for best permeability scenario, it is noticed that when permeability is
too low (Table 5, Example 3, worst case), multilateral well is no longer attractive from economic point of view; the NPV from
the horizontal well case is slightly higher than the one from the multilateral well case.

Table 4 Economic input data used for NPV estimation

Economic Input Data

Cases 1 and 2 Case 3
Vertical Well Horizontal Well Multilateral Well Vertical Well Horizontal Well Multilateral Well
Oil Price, $/Boe $ 80.00 $ 80.00 $ 80.00 Gas Price, $/Mcfe $ 8.00 $ 8.00 $ 8.00
Fixed Cost $ 2,000.00 $ 4,000.00 $ 4,500.00 Fixed Cost $ 1,000.00 $ 2,000.00 $ 2,500.00
Variable Oil $ 10.00 $ 8.00 $ 6.00 Variable Gas $ 0.50 $ 0.30 $ 0.20
Water Disposal $ 2.00 $ 2.00 $ 2.00 Water Disposal $ 2.00 $ 2.00 $ 2.00
D&C $ 2,500,000.00 $ 4,000,000.00 $ 6,000,000.00 D&C $ 2,500,000.00 $ 4,000,000.00 $ 6,000,000.00

1,000

900

800

700

600

500
USD M

400

300

200

100

0
0 25 50 75 100 125 150 175
-100
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 6 Example 1 – Cumulative FCF under base case scenario

8 SPE 115099

500

400

USD M 300

200

100

0
0 25 50 75 100 125 150 175

-100
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 7 Example 2 – Cumulative FCF under base case scenario

40

35

30

25

20
USD M

15

10

0
0 25 50 75 100 125 150 175
-5

-10
Month

Base Case Vertical Well Base Case Horizontal Well Base Case Multilateral Well

Fig. 8 Example 3 – Cumulative FCF base scenario

SPE 115099 9

Table 5 NPV results under different scenarios

NPV Results for Examples 1 and 2

10% Disc. NPV, USD M

Well Type Example 1 - Oil Well with kv/kh=0.10 Example 2 - Oil Well with kv/kh=0.01
Low (Worst) Medium (Base) High (Best) Low (Worst) Medium (Base) High (Best)
Vertical Well $ 37.66 $ 77.61 $ 117.78 $ 37.66 $ 77.61 $ 117.78
Horizontal Well $ 191.19 $ 386.36 $ 581.44 $ 42.22 $ 128.96 $ 195.62
Multilateral Well $ 283.63 $ 573.21 $ 863.74 $ 71.08 $ 214.14 $ 324.31

NPV for Example 3

10% Disc. NPV, USD M

Well Type Example 3 - Gas Well with kv/kh=0.10
Low (Worst) Medium (Base) High (Best)
Vertical Well $ (0.59) $ 1.18 $ 2.96
Horizontal Well $ 7.72 $ 19.14 $ 30.56
Multilateral Well $ 7.16 $ 19.72 $ 32.18

Risk Analysis: The economic results indicate that that the most profitable well type is the multilateral well for development in
Examples 1 and 2; and either horizontal or multilateral well for Example 3 since NPV results do not differ significantly.
Nevertheless, without considering risk and uncertainty of geological features, reservoir engineering conditions and D&C
chances to succeed or fail, it is not possible to ensure that the most efficient decision is made based merely on NPV results.
Therefore, all events that can occur during the execution of the project must be included in the branches of a decision tree. An
influence diagram is useful in identifying all the possible conditions that may affect the outcome, and such a diagram for the
studied case is shown in Fig. 9. Practically all different aspects such as geological features and reservoir engineering
characteristics or reservoir quality have influence upon each other and the EMV ($).

Geological
Features
Drilling
Success

Well
Type
$

Completion
Reservoir Success
Engineering

Fig. 9 Influence diagram for a deterministic decision tree analysis

The decision tree used in this methodology starts from the geological conditions (faults/compartments); followed by the
reservoir engineering evaluation or quality of the reservoir (high, medium and low permeability); and then success/failure of
drilling and completing the well (Fig. 10). Each branch of this decision tree has a specific probability as function of
predetermined conditions and well type in order to estimate the EMV of NPV at 10% discount rate. Although for these
examples, tables are used to represent all the probabilities corresponding to each branch of the decision tree. The detailed
decision trees for each case are presented in the appendices (Appendix A: Example 1, Appendix B: Example 2, and Appendix
C: Example 3).
One must be aware that assigning chances can be detrimental for the selection of the best option; objective and careful
analysis from the decision makers is imperative. Prior to assessing probabilities in the decision tree, engineers should acquire
all pertinent data and lessons learned from previous experience.
10 SPE 115099

Vertical well

Reservoir
Geological Features Engineering Drilling Completion
Non faulted/ Evaluation
compartmentalized

High
Success Success

Horizontal well Medium $

Failure Failure
Low

Geological Features
Faulted/
compartmentalized

Multilateral well

Fig. 10 Decision tree analysis

For this study, we have defined faults/compartments likelihood to occur as it showed in Table 6. The chance to face faults is
the same for Examples 1 and 2 since it is the same reservoir but different kv. Table 7 presents reservoir engineering
characteristics evaluation, independently of the anisotropy ratio, to determine the quality of the reservoir. Faults and
compartments slightly diminish the quality of the reservoir; the likelihood to encounter a low quality reservoir increases with
complexity in the formation increases.

Table 6 Probabilities of geological features

Example Geological Features

Non faulted/compartmentalized 40%

Example 1
Faulted/compartmentalized 60%
Non faulted/compartmentalized 40%
Example 2
Faulted/compartmentalized 60%
Non faulted/compartmentalized 30%
Example 3
Faulted/compartmentalized 70%

Table 7 Probabilities of reservoir quality

Reservoir Engineering Evaluation

Faulted/compartmentalized
High Medium Low
Non faulted/compartmentalized 30% 50% 20%
Faulted/compartmentalized 20% 40% 40%

Table 8 shows the assigned probabilities of success in drilling and completing a vertical well. It is evident that the rate of
failure is low due to the simplicity of the system. Tables 9 and 10 refer to the defined chances to succeed when horizontal or
multilateral well types are under consideration. The impact of reservoir conditions in these wells is more significant than in
vertical wells, having multilateral wells the lowest ratio to succeed in drilling and completion. Regardless of the geological
condition existent, the risk to fail in completing the well has been defined as an independent factor to the faults/compartments.
SPE 115099 11

Table 8 Vertical well probabilities of drilling and completion success

Geological and Vertical Well

Faulted/compartmentalized k ratio Reservoir Drilling Completion
Engineering Success Failure Success Failure
High 98% 2% 98% 2%
kv/kh=0.10 Medium 95% 5% 95% 5%
Low 92% 8% 92% 8%
Non faulted/compartmentalized
High 98% 2% 98% 2%
kv/kh=0.01 Medium 95% 5% 95% 5%
Low 92% 8% 92% 8%
High 96% 4% 98% 2%
kv/kh=0.10 Medium 93% 7% 95% 5%
Low 90% 10% 92% 8%
Faulted/compartmentalized
High 96% 4% 98% 2%
kv/kh=0.01 Medium 93% 7% 95% 5%
Low 90% 10% 92% 8%

Table 9 Horizontal well probabilities of drilling and completion success

Geological and Horizontal Well

Faulted/compartmentalized k ratio Reservoir Drilling Completion
Engineering Success Failure Success Failure
High 92% 8% 96% 4%
kv/kh=0.10 Medium 89% 11% 93% 7%
Low 87% 13% 90% 10%
Non faulted/compartmentalized
High 92% 8% 96% 4%
kv/kh=0.01 Medium 89% 11% 93% 7%
Low 87% 13% 90% 10%
High 90% 10% 96% 4%
kv/kh=0.10 Medium 87% 13% 93% 7%
Low 85% 15% 90% 10%
Faulted/compartmentalized
High 90% 10% 96% 4%
kv/kh=0.01 Medium 87% 13% 93% 7%
Low 85% 15% 90% 10%

Table 10 Multilateral well probabilities of drilling and completion success

Geological and Multilateral Well

Faulted/compartmentalized k ratio Reservoir Drilling Completion
Engineering Success Failure Success Failure
High 88% 12% 93% 7%
kv/kh=0.10 Medium 85% 15% 90% 10%
Low 82% 18% 87% 13%
Non faulted/compartmentalized
High 88% 12% 93% 7%
kv/kh=0.01 Medium 85% 15% 90% 10%
Low 82% 18% 87% 13%
High 86% 14% 93% 7%
kv/kh=0.10 Medium 83% 17% 90% 10%
Low 80% 20% 87% 13%
Faulted/compartmentalized
High 86% 14% 93% 7%
kv/kh=0.01 Medium 83% 17% 90% 10%
Low 80% 20% 87% 13%

The economic analysis leads one to believe that horizontal and multilateral wells substantially yield additional revenue.
Although, after considering the likelihood of geological features, reservoir engineering conditions and the rates of success in
drilling and completion; the EMV differs from the economic analysis results in Example 3 (Table 11) but confirms the results
obtained in Examples 1 and 2. The EMV is calculated using cost of failure during drilling and completing the well. For a
vertical well, we have estimated $ 3 MUSD and $ 4 MUSD for drilling and completion failures respectively, $ 4.5 MUSD and
$ 6 MUSD for a horizontal well, and $ 4.8 MUSD and $ 6.5 MUSD for a multilateral well.
12 SPE 115099

Table 11 EMV – Summary of results

Example Well Type EMV, USD M

Vertical Well $ 66.16
Example 1 Horizontal Well $ 307.05
Multilateral Well $ 420.41
Vertical Well $ 66.16
Example 2 Horizontal Well $ 96.88
Multilateral Well $ 148.72
Vertical Well $ 0.47
Example 3 Horizontal Well $ 13.91
Multilateral Well $ 12.70

A sensitivity analysis where the EMV (probabilities associated to each NPV) is used, demonstrates that not for all cases the
economic analysis results are proved to lead to select the best well type option. Examples 1 and 2 confirm the results obtained
in the economic analysis although the multilateral well could not represent such an attractive alternative under high anisotropy
ratio in Example 2 due to the higher risk involved and still great revenues forecasted from a horizontal well (Table 11).
Example 3 does not confirm the economic analysis prediction, many factors under the reservoir quality study must be carefully
addressed because it may be feasible to drill a second lateral but not worthwhile if it is a very poor candidate.
Figures 11 through 13 illustrate the effect of featured faulted and compartmentalized reservoirs. If a highly anisotropic
reservoir is analyzed, the EMV does not seem to be highly affected by the type of well or the complexity of the formation due
to faults. In cases where there is certain homogeneity, higher kv/kh, faults and well type play a more detrimental role defining
the EMV. Uncertainty and risk play a role in making decisions. Without accounting for the uncertainties, one can be mislead
and obtain poor results such as underperformance of wells, excessive costs being occurred, and missing the target of
management expectations.

300

250

200
EMV, USD M

150

100

50

0
Vertical Well Horizontal Well Multilateral Well

Geological Features
Non faulted/compartmentalized Faulted/compartmentalized

Fig. 11 Example 1 - Sensitivity analysis

SPE 115099 13

100

80

60

EMV, USD M

40

20

0
Vertical Well Horizontal Well Multilateral Well

Geological Features

Non faulted/compartmentalized Faulted/compartmentalized

Fig. 12 Example 2 - Sensitivity analysis

10

8
EMV, $ USD M

0
Vertical Well Horizontal Well Multilateral Well

Geological Conditions
Non faulted/compartmentalized Faulted/compartmentalized

Fig. 13 Example 3 - Sensitivity analysis

Conclusions
• Technical, economic and risk analysis must be concurrently performed to enable us making better decisions.
• Homogeneity and heterogeneity in oil and gas reservoirs is detrimental to the success of each type of completion. Every
reservoir presents unique characteristics that need to be individually analyzed.
• The use of purely deterministic methods, e.g. decision trees, is highly dependant on the use of existing knowledge and
experience leading sometimes to biased evaluation of options.
• Deterministic and probabilistic methods could be used in conjunction to evaluate several alternatives due to the nature of
the oil and gas industry: high risk involved, high capital intensive investments, complexity of operations and, income
potential.
14 SPE 115099

Nomenclature

A = Drainage area, ft2

Bo = Oil formation volume factor, res bbl/STB
b = Reservoir length, ft
bhyp = Hyperbolic Curve Exponent
CH = Shape factor, dimensionless
Ci = Chance Node
D = Non-Darcy coefficient, dimensionless
Di = Hyperbolic initial nominal decline rate
Dt = Tubing diameter (ft)
Fv = Future sum received at time t
h = Thickness, ft
ie = Effective interest rate (discount rate, fraction)
k = Average permeability, md
kh = Horizontal permeability, md
kv = Vertical permeability, md
Np = Oil or gas produced volume, STB or Mscf
NPVi = Net present value corresponding to the branch with Pi, USD M
P = Average reservoir pressure, psi
pi = Conditional Probability
p wf = Flowing bottom-hole pressure, psi
Qi = Initial rate, STB or Mscf
Qt = Rate at time t, STB or Mscf
qg = Gas rate, Mscf
qo = Oil rate, STB
re = Drainage radius, ft
rw = Well radius, ft
S = Skin effect, dimensionless
SR = Partial penetration skin factor, dimensionless

μ = Average oil or gas viscosity (cp)

T = Average reservoir temperature (R)
Z = Average gas compressibility (gas deviation factor), dimensionless
ρ = Density (lbm/ft3)

Reference
Arps, J. J.: “Analysis of Decline Curves”, paper SPE 945228 presented at the A.I.M.E., Houston meeting, May 1944.
Babu, D.K. and Odeh, A. S.: “Productivity of a Horizontal Well”, paper SPE 18298 presented at the SPE Annual Technical
Conference and Exhibition, Houston, Texas, October 2-5, 1989.
Brister R.: “Screening Variables for Multilateral Technologies”, paper SPE 64698 presented at the International Oil and Gas
Conference Exhibition, Beijing, China, November 7-10, 2000.
Economides, M., Hill, D., and Economides, C., 1994. Petroleum Production Systems, 155. New Jersey: Prentice Hall Petroleum
Engineering Series.
Kamkom, R. and Zhu, D.: “Generalized Horizontal Well Inflow Relationships for Liquid, Gas or Two-Phase Flow”, paper SPE 99712
presented at the Symposium on Improved Oil Recovery, Tulsa, Oklahoma, April 22-26, 2006.
Mian, M. A., 2002. Project Economic and Decision Analysis. Volume I: Deterministic Models, 93. Oklahoma: PennWell Corporation.
Mian, M. A., 2002. Project Economics and Decision Analysis. Volume II: Probabilistic Models, 197. Oklahom: PennWell
Corporation.
SPE 115099 15

Appendix A: Example 1
Data to be input by user
98% 11.5%
Success
$ 117.78 M
$ 117.78 M
98% Chance
Success Completion
$ 115.34 M

30% Chance 2% 0.2%

High Drilling Failure
$ 112.98 M $ (4.00) M
$ (4.00) M
2% 0.2%
Failure
$ (3.00) M
$ (3.00) M

95% 18.1%
Success
Chance $ 77.61 M
$ 75.01 M $ 77.61 M
95% Chance
Success Completion
$ 73.53 M

40% Reservoir Engineering 50% Chance 5% 1.0%

Geological Features: Non Medium Drilling Failure
Evaluation $ 69.70 M $ (4.00) M
Faulted/Compartmentalized
$ (4.00) M
5% 1.0%
Failure
$ (3.00) M
$ (3.00) M

92% 6.8%
Success
$ 37.66 M
$ 37.66 M
92% Chance
Success Completion
$ 34.33 M

20% Chance 8% 0.6%

Low Drilling Failure
$ 31.34 M $ (4.00) M
$ (4.00) M
8% 0.6%
Failure
$ (3.00) M
$ (3.00) M

Drill Vertical Well? Chance 96% 11.1%

Success
$ 66.16 M $ 117.78 M
$ 117.78 M
96% Chance
Success Completion
$ 112.91 M

20% Chance 4% 0.5%

High Drilling Failure
$ 108.27 M $ (4.00) M
$ (4.00) M
4% 0.5%
Failure
$ (3.00) M
$ (3.00) M

93% 20.8%
Success
Chance $ 77.61 M
$ 60.25 M $ 77.61 M
93% Chance
Success Completion
$ 71.89 M
60% Reservoir Engineering
Geological Features:
Evaluation 40% Chance 7% 1.6%
Faulted/Compartmentalized Medium Drilling Failure
$ 66.65 M $ (4.00) M
$ (4.00) M
7% 1.7%
Failure
$ (3.00) M
$ (3.00) M

90% 19.4%
Success
$ 37.66 M
$ 37.66 M
90% Chance
Success Completion
$ 33.50 M

40% Chance 10% 2.2%

Low Drilling Failure
$ 29.85 M $ (4.00) M
$ (4.00) M
10% 2.4%
Failure
$ (3.00) M
$ (3.00) M

96% 10.6%
Success
$ 581.44 M
$ 581.44 M
92% Chance
Success Completion
$ 557.95 M

30% Chance 4% 0.4%

High Drilling Failure
$ 512.95 M $ (6.00) M
$ (6.00) M
8% 1.0%
Failure
$ (4.50) M
$ (4.50) M

93% 16.6%
Success
Chance $ 386.36 M
$ 343.07 M $ 386.36 M
89% Chance
Success Completion
$ 358.90 M

Geological Features: Non

40% Reservoir Engineering 50% Chance 7% 1.2%
Faulted/Compartmentalized Medium Drilling Failure
Evaluation $ 318.92 M $ (6.00) M
$ (6.00) M
11% 2.2%
Failure
$ (4.50) M
$ (4.50) M

90% 6.3%
Success
$ 191.19 M
$ 191.19 M
87% Chance
Success Completion
$ 171.47 M

20% Chance 10% 0.7%

Low Drilling Failure
$ 148.59 M $ (6.00) M
$ (6.00) M
13% 1.0%
Failure
$ (4.50) M
$ (4.50) M

Chance
Drill Horizontal
$ 307.05 M
Well?
96% 10.4%
Success
$ 581.44 M
$ 581.44 M
Decision: Success
90%
Completion
Chance
$ 420.41 M $ 557.95 M

20% Chance 4% 0.4%

High Drilling Failure
Drill a $ 501.70 M $ (6.00) M
Multilateral Well $ (6.00) M
10% 1.2%
Failure
$ (4.50) M
$ (4.50) M

93% 19.4%
Success
Chance $ 386.36 M
$ 283.03 M $ 386.36 M
87% Chance
Success Completion
$ 358.90 M

60% Reservoir Engineering 40% Chance 7% 1.5%

Geological Features: Medium Drilling Failure
Evaluation $ 311.66 M $ (6.00) M
Faulted/Compartmentalized $ (6.00) M
13% 3.1%
Failure
$ (4.50) M
$ (4.50) M

90% 18.4%
Success
$ 191.19 M
$ 191.19 M
85% Chance
Success Completion
$ 171.47 M

40% Chance 10% 2.0%

Low Drilling Failure
$ 145.07 M $ (6.00) M
$ (6.00) M
15% 3.6%
Failure
$ (4.50) M
$ (4.50) M

93% 9.8%
Success
$ 863.74 M
$ 863.74 M
88% Chance
Success Completion
$ 802.82 M

30% Chance 7% 0.7%

High Drilling Failure
$ 705.90 M $ (6.50) M
$ (6.50) M
12% 1.4%
Failure
$ (4.80) M
$ (4.80) M

90% 15.3%
Success
Chance $ 573.21 M
$ 470.54 M $ 573.21 M
85% Chance
Success Completion $ 515.24 M

40% Reservoir Engineering 50% Chance 10% 1.7%

Geological Features: Non Medium Drilling Failure
Evaluation $ 437.23 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
15% 3.0%
Failure
$ (4.80) M
$ (4.80) M

87% 5.7%
Success
$ 283.63 M
$ 283.63 M
82% Chance
Success Completion
$ 245.91 M

20% Chance 13% 0.9%

Low Drilling Failure
$ 200.79 M $ (6.50) M
$ (6.50) M
18% 1.4%
Failure
$ (4.80) M
$ (4.80) M

Chance
Drill Multilateral
$ 420.41 M
Well 9.6%
93%
Success
$ 863.74 M
$ 863.74 M
86% Chance
Success Completion
$ 802.82 M

20% Chance 7% 0.7%

High Drilling Failure
$ 689.75 M $ (6.50) M
$ (6.50) M
14% 1.7%
Failure
$ (4.80) M
$ (4.80) M

90% 17.9%
Success
Chance $ 573.21 M
$ 386.99 M $ 573.21 M
83% Chance
Success Completion
$ 515.24 M

60% Reservoir Engineering 40% Chance 10% 2.0%

Geological Features: Medium Drilling Failure
Evaluation $ 426.83 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
17% 4.1%
Failure
$ (4.80) M
$ (4.80) M

87% 16.7%
Success
$ 283.63 M
$ 283.63 M
80% Chance
Success Completion
$ 245.91 M

40% Chance 13% 2.5%

Low Drilling Failure
$ 195.77 M $ (6.50) M
$ (6.50) M
20% 4.8%
Failure
$ (4.80) M
$ (4.80) M
16 SPE 115099

Appendix B: Example 2
Data to be input by user
98% 11.5%
Success
$ 117.78 M
$ 117.78 M
98% Chance
Success Completion
$ 115.34 M

30% Chance 2% 0.2%

High Drilling Failure
$ 112.98 M $ (4.00) M
$ (4.00) M
2% 0.2%
Failure
$ (3.00) M
$ (3.00) M

95% 18.1%
Success
Chance $ 77.61 M
$ 75.01 M $ 77.61 M
95% Chance
Success Completion
$ 73.53 M

40% Reservoir Engineering 50% Chance 5% 1.0%

Geological Features: Non Medium Drilling Failure
Evaluation $ 69.70 M $ (4.00) M
Faulted/Compartmentalized
$ (4.00) M
5% 1.0%
Failure
$ (3.00) M
$ (3.00) M

92% 6.8%
Success
$ 37.66 M
$ 37.66 M
92% Chance
Success Completion
$ 34.33 M

20% Chance 8% 0.6%

Low Drilling Failure
$ 31.34 M $ (4.00) M
$ (4.00) M
8% 0.6%
Failure
$ (3.00) M
$ (3.00) M

Drill Vertical Well? Chance 96% 11.1%

Success
$ 66.16 M $ 117.78 M
$ 117.78 M
96% Chance
Success Completion
$ 112.91 M

20% Chance 4% 0.5%

High Drilling Failure
$ 108.27 M $ (4.00) M
$ (4.00) M
4% 0.5%
Failure
$ (3.00) M
$ (3.00) M

93% 20.8%
Success
Chance $ 77.61 M
$ 60.25 M $ 77.61 M
93% Chance
Success Completion
$ 71.89 M
60% Reservoir Engineering
Geological Features:
Evaluation 40% Chance 7% 1.6%
Faulted/Compartmentalized Medium Drilling Failure
$ 66.65 M $ (4.00) M
$ (4.00) M
7% 1.7%
Failure
$ (3.00) M
$ (3.00) M

90% 19.4%
Success
$ 37.66 M
$ 37.66 M
90% Chance
Success Completion
$ 33.50 M

40% Chance 10% 2.2%

Low Drilling Failure
$ 29.85 M $ (4.00) M
$ (4.00) M
10% 2.4%
Failure
$ (3.00) M
$ (3.00) M

96% 10.6%
Success
$ 195.62 M
$ 195.62 M
92% Chance
Success Completion
$ 187.55 M

30% Chance 4% 0.4%

High Drilling Failure
$ 172.19 M $ (6.00) M
$ (6.00) M
8% 1.0%
Failure
$ (4.50) M
$ (4.50) M

93% 16.6%
Success
Chance $ 128.96 M
$ 110.98 M $ 128.96 M
89% Chance
Success Completion
$ 119.52 M

Geological Features: Non

40% Reservoir Engineering 50% Chance 7% 1.2%
Faulted/Compartmentalized Medium Drilling Failure
Evaluation $ 105.87 M $ (6.00) M
$ (6.00) M
11% 2.2%
Failure
$ (4.50) M
$ (4.50) M

90% 6.3%
Success
$ 42.22 M
$ 42.22 M
87% Chance
Success Completion
$ 37.40 M

20% Chance 10% 0.7%

Low Drilling Failure
$ 31.95 M $ (6.00) M
$ (6.00) M
13% 1.0%
Failure
$ (4.50) M
$ (4.50) M

Chance
Drill Horizontal
$ 96.88 M
Well?
96% 10.4%
Success
$ 195.62 M
$ 195.62 M
Decision: Success
90%
Completion
Chance
$ 148.72 M $ 187.55 M

20% Chance 4% 0.4%

Drill a High Drilling Failure
$ 168.35 M $ (6.00) M
Multilateral Well $ (6.00) M
10% 1.2%
Failure
$ (4.50) M
$ (4.50) M

93% 19.4%
Success
Chance $ 128.96 M
$ 87.47 M $ 128.96 M
87% Chance
Success Completion
$ 119.52 M

60% Reservoir Engineering 40% Chance 7% 1.5%

Geological Features: Medium Drilling Failure
Evaluation $ 103.39 M $ (6.00) M
Faulted/Compartmentalized
$ (6.00) M
13% 3.1%
Failure
$ (4.50) M
$ (4.50) M

90% 18.4%
Success
$ 42.22 M
$ 42.22 M
85% Chance
Success Completion
$ 37.40 M

40% Chance 10% 2.0%

Low Drilling Failure
$ 31.11 M $ (6.00) M
$ (6.00) M
15% 3.6%
Failure
$ (4.50) M
$ (4.50) M

93% 9.8%
Success
$ 324.31 M
$ 324.31 M
88% Chance
Success Completion
$ 301.15 M

30% Chance 7% 0.7%

High Drilling Failure
$ 264.44 M $ (6.50) M
$ (6.50) M
12% 1.4%
Failure
$ (4.80) M
$ (4.80) M

90% 15.3%
Success
Chance $ 214.14 M
$ 170.43 M $ 214.14 M
85% Chance
Success Completion
$ 192.08 M

40% Reservoir Engineering 50% Chance 10% 1.7%

Geological Features: Non Medium Drilling Failure
Evaluation $ 162.55 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
15% 3.0%
Failure
$ (4.80) M
$ (4.80) M

87% 5.7%
Success
$ 71.08 M
$ 71.08 M
82% Chance
Success Completion
$ 60.99 M

20% Chance 13% 0.9%

Low Drilling Failure
$ 49.15 M $ (6.50) M
$ (6.50) M
18% 1.4%
Failure
$ (4.80) M
$ (4.80) M

Chance
Drill Multilateral
$ 148.72 M
Well 9.6%
93%
Success
$ 324.31 M
$ 324.31 M
86% Chance
Success Completion
$ 301.15 M

20% Chance 7% 0.7%

High Drilling Failure
$ 258.32 M $ (6.50) M
$ (6.50) M
14% 1.7%
Failure
$ (4.80) M
$ (4.80) M

90% 17.9%
Success
Chance $ 214.14 M
$ 134.24 M $ 214.14 M
83% Chance
Success Completion
$ 192.08 M

60% Reservoir Engineering 40% Chance 10% 2.0%

Geological Features: Medium Drilling Failure
Evaluation $ 158.61 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
17% 4.1%
Failure
$ (4.80) M
$ (4.80) M

87% 16.7%
Success
$ 71.08 M
$ 71.08 M
80% Chance
Success Completion
$ 60.99 M

40% Chance 13% 2.5%

Low Drilling Failure
$ 47.83 M $ (6.50) M
$ (6.50) M
20% 4.8%
Failure
$ (4.80) M
$ (4.80) M
SPE 115099 17

Appendix C: Example 3
Data to be input by user
98% 8.6%
Success
$ 2.96 M
$ 2.96 M
98% Chance
Success Completion
$ 2.83 M

30% Chance 2% 0.2%

High Drilling Failure
$ 2.71 M $ (4.00) M
$ (4.00) M
2% 0.2%
Failure
$ (3.00) M
$ (3.00) M

95% 13.5%
Success
Chance $ 1.18 M
$ 0.97 M $ 1.18 M
95% Chance
Success Completion
$ 0.93 M

30% Reservoir Engineering 50% Chance 5% 0.7%

Geological Features: Non Medium Drilling Failure
Evaluation $ 0.73 M $ (4.00) M
Faulted/Compartmentalized
$ (4.00) M
5% 0.8%
Failure
$ (3.00) M
$ (3.00) M

92% 5.1%
Success
$ (0.59) M
$ (0.59) M
92% Chance
Success Completion
$ (0.87) M

20% Chance 8% 0.4%

Low Drilling Failure
$ (1.04) M $ (4.00) M
$ (4.00) M
8% 0.5%
Failure
$ (3.00) M
$ (3.00) M

Drill Vertical Well? Chance 96% 12.9%

Success
$ 0.47 M $ 2.96 M
$ 2.96 M
96% Chance
Success Completion
$ 2.69 M

20% Chance 4% 0.5%

High Drilling Failure
$ 2.46 M $ (4.00) M
$ (4.00) M
4% 0.6%
Failure
$ (3.00) M
$ (3.00) M

93% 24.2%
Success
Chance $ 1.18 M
$ 0.26 M $ 1.18 M
93% Chance
Success Completion
$ 0.82 M
70% Reservoir Engineering
Geological Features:
Evaluation 40% Chance 7% 1.8%
Faulted/Compartmentalized Medium Drilling Failure
$ 0.55 M $ (4.00) M
$ (4.00) M
7% 2.0%
Failure
$ (3.00) M
$ (3.00) M

90% 22.7%
Success
$ (0.59) M
$ (0.59) M
90% Chance
Success Completion
$ (0.94) M

40% Chance 10% 2.5%

Low Drilling Failure
$ (1.14) M $ (4.00) M
$ (4.00) M
10% 2.8%
Failure
$ (3.00) M
$ (3.00) M

96% 7.9%
Success
$ 30.56 M
$ 30.56 M
92% Chance
Success Completion
$ 29.10 M

30% Chance 4% 0.3%

High Drilling Failure
$ 26.41 M $ (6.00) M
$ (6.00) M
8% 0.7%
Failure
$ (4.50) M
$ (4.50) M

93% 12.4%
Success
Chance $ 19.14 M
$ 16.40 M $ 19.14 M
89% Chance
Success Completion
$ 17.38 M

Geological Features: Non

30% Reservoir Engineering 50% Chance 7% 0.9%
Faulted/Compartmentalized Medium Drilling Failure
Evaluation $ 14.97 M $ (6.00) M
$ (6.00) M
11% 1.7%
Failure
$ (4.50) M
$ (4.50) M

90% 4.7%
Success
$ 7.72 M
$ 7.72 M
87% Chance
Success Completion
$ 6.35 M

20% Chance 10% 0.5%

Low Drilling Failure
$ 4.94 M $ (6.00) M
$ (6.00) M
13% 0.8%
Failure
$ (4.50) M
$ (4.50) M

Chance
Drill Horizontal
$ 13.91 M
Well? 12.1%
96%
Success
$ 30.56 M
$ 30.56 M
Decision: Success
90%
Completion
Chance
$ 13.91 M $ 29.10 M

20% Chance 4% 0.5%

Drill a Horizontal High Drilling Failure
$ 25.74 M $ (6.00) M
Well $ (6.00) M
10% 1.4%
Failure
$ (4.50) M
$ (4.50) M

93% 22.7%
Success
Chance $ 19.14 M
$ 12.85 M $ 19.14 M
87% Chance
Success Completion
$ 17.38 M

70% Reservoir Engineering 40% Chance 7% 1.7%

Geological Features: Medium Drilling Failure
Evaluation $ 14.54 M $ (6.00) M
Faulted/Compartmentalized
$ (6.00) M
13% 3.6%
Failure
$ (4.50) M
$ (4.50) M

90% 21.4%
Success
$ 7.72 M
$ 7.72 M
85% Chance
Success Completion
$ 6.35 M

40% Chance 10% 2.4%

Low Drilling Failure
$ 4.72 M $ (6.00) M
$ (6.00) M
15% 4.2%
Failure
$ (4.50) M
$ (4.50) M

93% 7.4%
Success
$ 32.18 M
$ 32.18 M
88% Chance
Success Completion
$ 29.47 M

30% Chance 7% 0.6%

High Drilling Failure
$ 25.36 M $ (6.50) M
$ (6.50) M
12% 1.1%
Failure
$ (4.80) M
$ (4.80) M

90% 11.5%
Success
Chance $ 19.72 M
$ 15.22 M $ 19.72 M
85% Chance
Success Completion
$ 17.10 M

30% Reservoir Engineering 50% Chance 10% 1.3%

Geological Features: Non Medium Drilling Failure
Evaluation $ 13.81 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
15% 2.3%
Failure
$ (4.80) M
$ (4.80) M

87% 4.3%
Success
$ 7.16 M
$ 7.16 M
82% Chance
Success Completion
$ 5.39 M

20% Chance 13% 0.6%

Low Drilling Failure
$ 3.55 M $ (6.50) M
$ (6.50) M
18% 1.1%
Failure
$ (4.80) M
$ (4.80) M

Chance
Drill Multilateral
$ 12.70 M
Well 11.2%
93%
Success
$ 32.18 M
$ 32.18 M
86% Chance
Success Completion
$ 29.47 M

20% Chance 7% 0.8%

High Drilling Failure
$ 24.67 M $ (6.50) M
$ (6.50) M
14% 2.0%
Failure
$ (4.80) M
$ (4.80) M

90% 20.9%
Success
Chance $ 19.72 M
$ 11.62 M $ 19.72 M
83% Chance
Success Completion
$ 17.10 M

70% Reservoir Engineering 40% Chance 10% 2.3%

Geological Features: Medium Drilling Failure
Evaluation $ 13.37 M $ (6.50) M
Faulted/Compartmentalized $ (6.50) M
17% 4.8%
Failure
$ (4.80) M
$ (4.80) M

87% 19.5%
Success
$ 7.16 M
$ 7.16 M
80% Chance
Success Completion
$ 5.39 M

40% Chance 13% 2.9%

Low Drilling Failure
$ 3.35 M $ (6.50) M
$ (6.50) M
20% 5.6%
Failure
$ (4.80) M
$ (4.80) M